How the Headache of Lunch Orders Helped Heat Up Sales for Caterer

Feldo Nartapura’s Indonesian food cart was just barely paying the bills. A rainy Saturday meant lackluster attendance at that weekend’s food festival, leaving him with too many leftover satays and too little money.

Last summer, Nartapura was told about ZeroCater, a San Francisco-based startup that connects a diverse mix of caterers with local companies that are looking for variety in their daily lunches.

Now, less than a year later, Nartapura’s catering service, Sataysfied, has 12 to 18 lunch deliveries per week and in some months is pulling in $30,000, or about three times what he was making previously. He’s cooking out of a commercial kitchen in the East Bay, while ZeroCater is scheduling the deliveries and handling all the billing and customer correspondence. For that, he hands over about 20 percent of his sales to ZeroCater, a price he’s happy to pay because of the consistent business he’s now getting.

“I know how much prep to do that week and how much I will make,” said Nartapura, 29. “I don’t even do food festival routes as much anymore because catering has done so well for me. It’s been less stressful, because the food truck rush and whole food festival is a lot of schlepping.”

Nartapura is now driving all over the Bay Area during the week, including frequent trips to Palo Alto, home of Web payment startup WePay. Founded by Bill Clerico and Rich Aberman in 2008, WePay has been using ZeroCater for the past year, getting lunch delivered at noon every Monday through Thursday. Clerico appreciates that his employees get surveyed after each delivery so they can provide feedback on the food and service.

“We’d spend time ourselves finding restaurants, calling them, trying to get catering in and handling the logistics, or we could just pay ZeroCater to take care of it,” said Clerico, who’s also a fan of Indian dishes delivered by CurryUpNow. “They provide us a good variety of food, they’re really responsive to feedback, it keeps employees happy and it’s one less thing we have to worry about.”

That’s why 26-year-old Arram Sabeti created ZeroCater in 2009. He knew the food problem existed from his own experience ordering lunches at his previous employer, Justin.tv. Now, Sabeti, whom I profiled in this week’s Bloomberg Businessweek magazine, is trying to establish the go-to service for local companies that want better grub, be it sushi, sausages or Korean barbecue. About 220 companies in the Bay Area are now getting lunch served via ZeroCater from some 130 vendors.

ZeroCater isn’t a classic tech startup. Sabeti isn’t a programmer, and only two of his 17 staffers are full-time developers. Most of the others are managing accounts and visiting food trucks and farmers markets to find top-quality prospects. The company has built its own scheduling and client management software, but it makes money by charging a convenience fee to customers and sharing revenue with caterers — a services model.

The company has a ready-made client base thanks to Y Combinator, the tech incubator program co-founded by Paul Graham. ZeroCater, like WePay, is a graduate of the program, which Sabeti got connected to through Justin.tv, another alum. Hipmunk, also a Y Combinator company, gets deliveries from Zerocater every weekday, while Dropbox uses the service for occasional parties.

As ZeroCater tries to enter new markets, it will have to do so on its own, without the benefit of such close friends. Meanwhile, there’s already competition emerging from San Francisco startup Cater2.me, which says it’s served 800,000 meals to Silicon Valley. So the race is on to expand.

“That’s an issue of capital, execution and competence,” said Stewart Alsop, a venture capitalist, who joined a $1.5 million investment in ZeroCater last year. “My bet is on Arram’s ability to scale this business into something that’s worth something.”

Alsop has reason to believe it will work. He spent 21 years eating bland lunches in Silicon Valley office parks before opening his firm in San Francisco six years ago. For him, the service is a relief.

“The idea that you can source food from a bunch of different restaurants on different days and get a variety of food that’s good — it’s like an enhancement to life,” he said.